PARIS – Strident demonstrations against high energy bills in Spain. Social protection demands in Greece with the closure of coal mines. New protests in rural areas and small French towns over rising gasoline prices.
As world leaders gather for a UN conference in Glasgow to address the threat of climate change, attention is focused on one of the biggest risks of decarbonising the planet: making sure the costs of the green transition do not trigger a populist reaction. .
Concerns are especially acute in Europe, where policymakers are expressing growing alarm over the possibility of social unrest and a weakening of public support if the burden of changing cheap fossil fuels falls too much on poor and middle-income households. .
“The climate transition remains a risk for all democracies, because it will be very costly, much more costly than expected,” French Finance Minister Bruno Le Maire said in a recent interview.
“If we are not prudent, we run the risk of having a new yellow vest movement” that could emerge “all over Europe,” he said.
Those fierce protests in France in 2018, so christened by the millions of people who wore fluorescent vests as a sign of economic distress, are marked in the minds of many European leaders as they move forward with policies to turn the continent into a zero net emitter. for 2050. The protests began as a cry for a fuel tax hike imposed by Paris’s elites and erupted into a nationwide rejection of inequality and financial insecurity.
The urgency of avoiding further discontent points to the challenges facing almost all industrialized countries at the Glasgow conference, known as COP26. The yellow vest demonstrations of 2018 highlighted in a crude and sometimes violent way the risk of losing the political commitment of citizens facing rising costs to drive cars, heat homes and run appliances.
“People have to think about the end of the month before they can think about the end of the world,” said Guy Ryder, director general of the International Labor Organization, a United Nations agency.
“If governments neglect to incorporate labor market outcomes, social costs and notions of equity into their climate transition policies,” he added, “people will distance themselves from supporting action against climate change.” .
On Thursday, the United States moved toward the largest action it has ever taken to address climate change, reserving $ 555 billion in President Biden’s huge spending bill, including financial incentives to encourage the use of climate change. wind, solar and nuclear energy.
Europe has unveiled its own ambitious project to move away from fossil fuels over the next nine years, accompanied by policies aimed at ensuring a so-called “fair transition” for vulnerable people, as efforts to meet future climate goals affect directly lives and livelihoods. millions.
But rising energy prices have complicated Europe’s high targets, leaving governments struggling to offset the impact on households as signs of popular discontent increase.
Europe has relied heavily on natural gas to power homes and businesses while building a green energy infrastructure. This is leaving the continent vulnerable to price fluctuations driven by a global recovery from the pandemic and is causing a rift between countries that see the crisis as a reason to delay – or accelerate – a green energy transition.
In Spain, the government is taking emergency measures to redirect the benefits of energy companies to consumers after protesters in some cities broke windows in the offices of energy companies and thousands of poor families cut off electricity because they could not pay.
Italy’s Prime Minister Mario Draghi unveiled a € 3 billion package aimed at having a “strong social impact” for the poorest households and small businesses. President Emmanuel Macron is subsidizing energy bills in France over the winter and paying 100 euros (about $ 116) a month to low-income people after small protests recently erupted in central France, a center of yellow vests.
And in Greece, the government is trying to calm the anger by redirecting the money obtained from Greece’s carbon trading scheme to domestic energy subsidies, while making sure to make it known that the funds come from a tool to combat climate change.
“We will need such mechanisms to make sure that the poorest people do not pay the price,” Prime Minister Kyriakos Mitsotakis said in an interview. “Because if that happened, it would create a wave against the green transition that would undermine all the effort.”
Even before the recent energy crisis, some governments warned that Europeans may not be prepared to make the necessary sacrifices for a carbon-free future. Beyond the short-term pain of energy bills, there are the long-term structural challenges of a fundamental shift in the global economy as it moves away from fossil fuels.
A seismic disturbance in the way goods and services are produced will affect millions of jobs in fields as diverse as energy, agriculture, construction, shipping, finance, engineering, retail and even fashion, altering the social welfare needs of people who will require new skills. and training to adapt. Electric cars need fewer parts, and in France alone up to 120,000 jobs are expected to be lost in the automotive industry.
Although up to 24 million new jobs linked to the green economy could be created by 2030, according to International Labor Organization estimates, “the risk is that skills may be too slow to adjust. “Yes,” said Patrick Artus, chief economist at the Paris-based organization. Natixis Bank.
The nations that signed the Paris Agreement in 2015 pledged to guide so-called fair transition policies in their climate plans, promising fair employment and energy affordability for the people and businesses affected by the pivot. Europe has earmarked up to € 75 billion for its plan, which provides specific support to help governments reduce the social and economic impact on the hardest hit regions.
Money is flowing to countries like Greece, which is accelerating the closure of crude lignite coal mines as it tries to create a clean energy economy. To gain public support for the closures, which affect more than 8,000 jobs in mining, the government is proposing recycling and relocation programs, and is looking for investments in carbon-neutral agriculture, solar farms and sustainable tourism to create new employment opportunities.
Still, how to pay for the transition, and who should take the bill from the most vulnerable, will remain one of the biggest challenges for decades to come. Wealthy nations pledged last week to raise $ 100 billion a year to help poor countries tackle climate change, long after the pledge was written into the 2015 Paris agreement.
The European Union aims to raise money directly from financial markets by issuing green bonds worth up to € 250 billion, an increasingly popular instrument among investors, to help member states fund these efforts. . And negotiators at the COP26 meeting will face a decision on the thorny issue of setting a carbon price for major pollutants.
After all, the social and economic inequalities resulting from the transition must be resolved, said Lucas Chancel, co-director of the Paris-based World Inequality Lab and author of a recent study that concludes that a key way to overcoming this gap is with higher taxes on the richest and on the greatest benefits of globalization.
“To address the question of who should pay for the transition, we need to focus on who contributes the most to the problem,” he said. The study showed that the richest 10% of the world emitted almost half of global emissions in 2019, while the poorest half of the world’s population was responsible for 12%.
“There will be no breakthrough with the green transition without a large-scale redistribution,” Chancel said. “If we don’t redistribute wealth to accompany low- and middle-income groups, then the transition won’t work,” he said.
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